Weekly commentary on startups, entrepreneurship and business

Edition 27

“Maybe I should not 
have mentioned that"
Masayoshi Son

Dear *|HTML:FNAME|*,

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The Flipkart deal was formally announced last week, and one of the surprising (?) rejigs was the freezing out of Sachin Bansal. This only reinforced my analysis last week, his exit tying a bow on a very spirited attempt at building a legendary Indian internet company. Much has been said about the deal, and much will be said. I will instead talk about the Indian influence of a target of another ~$20B deal - Whatsapp.

Whatsapp seemed like a crazy amount of money for Facebook until you realized the incredible user engagement metrics and the deep social graph was what Facebook actually paid for. It has seamlessly been integrated and amplified by Facebook, and Walmart might be able to conjure something similar for Flipkart. Although Flipkart was bought by Walmart for Indian consumers, I am sure Facebook never expected Whatsapp to have 200+ million monthly active users in India. Whatsapp's strong Indian user base might just result in it being a game changer in another unexpected area - fintech

I recently tried out Whatsapp payments, and it was surprisingly smooth. Its user experience was frictionless enough for me to never use a closed wallet (such as PayTm) for peer to peer transfers. The fact that it draws straight from your bank via UPI, rather than the intermediary wallet, gives it user stickiness. I think this is a threat to the widely used wallets that will be outexecuted on their primary use case. It is no wonder that Mr. Sharma cried foul about Whatsapp entering India. I have, though, always been sceptical about the business model of such wallets - it is hard to understand where the revenue comes from with 0 fees. 

The trope is that wallets are "all about customer acquisition" and once you have the user you can always monetize. The classic example is China, which built entire ecosystems on wallets such as Alipay. But you don't need to look any further than WeChat to see what Whatsapp is doing, converting a social network to a payments network. It is telling to see that WeChat has clawed a massive amount of market share from Alipay. Unsurprisingly, PayTm is attempting exactly what Alipay does. For example, the PayTm payments bank is analogous to Alipay's Yu'e Bao because it incentivizes users to lock funds in the wallet. Unlike Alipay's Alibaba, the key missing ingredient for Indian wallets is a predominant e-commerce platform, which pushes people transacting online through your wallet (PayTm Mall, anyone?)

It will be interesting to see how this shapes up as a fairly (quiet) battle for the Indian wallet (quite literally). My money is, again quite literally, on Whatsapp.  

This week, I look at Fukushima, Strategy and Big Lens et al. 
  1. [Large Startups]: Inside the brotherhood of ad blockers
  2. [Work Culture]: Communication multitasking is hurting our productivity
  3. [Growing Startups]: What the Flipkart deal means for Indian startups
  4. [Buzzwords]: The robot assault on Fukushima
  5. [Life x Startups]: AirBnB and Strava on connecting with customers
  6. [The New Monopolies]: Google's Duplex Voice Assistant will identify itself
  7. [Data!]: Killing Strategy - the disruption of Management Consulting
  8. [Modern Economics]: Reliance Jio's postpaid plan to destroy rivals
  9. [Classic Economics]: The spectacular power of Big Lens
  10. [Business is Entertainment]: Hip Hop is the only genre that matters now
Based on an excellent recommendation by members of the community, I now asterisk* paid articles. I have started adding India focused content as well. Please do drop in reads that you found interesting this week here and I would love to accommodate them. You can pass on the love by sharing this with your friends and colleagues who can sign up here, and these are all the previous editions

I started this with the belief that there is a whitespace on conversations by venture capitalists in the entrepreneurial and startup ecosystem in India. This is my small way of starting a conversation. In case you have any feedback on the structure, design or content please feel free to reach out to me in reply to this email. 

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